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4 things to do when creating a contract

On Behalf of | Jul 29, 2023 | BUSINESS & COMMERCIAL LAW - Contract Disputes

Contracts are the backbone of any strong business agreement. Contracts make it clear to each party what service or product they’re expected to provide.

Having a contract can also help strengthen business relationships. If you are creating a business contract, here are just a few things that are important.

Get the contract in writing

A verbal contract is just as legal as a written contract. However, an oral contract is harder to regulate and enforce if there are any legal issues. It’s always better to get a contract in writing,

Clarify what’s expected from every party

Once each party agrees there should be a written contract for a business arrangement, the contract should specify each party’s obligations and responsibilities. Parties may be responsible for providing a product or service by a specified deadline. For example, a party may be responsible for providing a product for six months without any issues, at which point the contract may end or be renewed.

Specify ways to resolve breaches

There’s always the possibility that a party will breach their contract. When this happens, products and services may not be provided and the other parties may suffer damages. A contract should include terms to resolve disputes.

For example, a contracted party may be required to compensate for any damages if a product is delivered late. If the damages are serious, the contract may be entirely severed and the business relationship discontinued.

Avoid confusing terminology

Many business disputes happen because a contract includes confusing terminology. Each party may believe that they understand their rights and responsibilities outlined in a contract. However, there may be a term that has multiple meanings, which leads a party to breach their contract. Each party should bring up any unclear terminology to avoid confusion before a contract is finalized and signed.

A strong contract can help avoid legal battles. To help ensure your contract won’t face any legal issues, it’s wise to have legal guidance.